Two basic articles on visual cryptography:
- Kumar, P., Agarwal, S., & Shivani, S. Halftone Visual Cryptography with Pixel Expansion through Error Diffusion. International Journal of Information & Computation Technology. ISSN, 0974-2239.
- Naor, Moni, and Adi Shamir. “Visual cryptography.” Advances in Cryptology EUROCRYPT’94. Springer Berlin Heidelberg, 1995.
One interesting thing about this schema is that can be applied for stenography and can be simply implemented physically using only shadows.
Update: a shorter explanation with examples.
See too: One Time Pad Using Gimp.